Huawei's China smartphone shipments surge as competitors like Apple tumble

Key Points
  • Huawei's smartphone shipments in China soared 31% in the second quarter, according to research published Tuesday by Canalys.
  • Apple’s shipments declined 14%, while shipments from Chinese competitors Oppo, Vivo and Xiaomi also tumbled.
  • Huawei now captures 38% of market share in China, Canalys said.
Richard Yu, CEO of Huawei's consumer business, speaks as he presents the P30 series smartphone during a launch event in Paris.
Marlene Awaad | Bloomberg | Getty Images

Huawei's smartphone shipments in China surged in the second quarter as the Chinese tech giant captured the highest market share of any vendor in the country in eight years, according to new data from research firm Canalys.

Canalys said Huawei's smartphone shipments in China soared 31% year-on-year, even as the overall market slowed. Apple's shipments declined 14% in the second quarter, while shipments from Chinese competitors Oppo, Vivo and Xiaomi also tumbled.

"Huawei's addition to the United States Entity List caused uncertainty overseas, but in China it has kept its foot on the accelerator," said Canalys analyst Mo Jia. "Its core strategy remains investing in aggressive offline expansion, and luring consumers from rival brands Oppo and Vivo, while unleashing a wave of marketing spend to support new channels and technologies."

Huawei now captures 38% of market share in China, according to Canalys. The research, published Tuesday, found Huawei's global mix has "shifted back toward China" as it faces growing scrutiny and trade barriers from the U.S.

On Tuesday, Huawei reported a 23.2% year-over-year increase in revenue for the first six months of 2019 year despite facing political headwinds.

In May, Trump administration put Huawei on a so-called entity list that required companies to receive special licenses to sell or transfer technology to Huawei.

What is Huawei?

U.S. officials argue Huawei's technology could pose a national security risk by opening a backdoor for Chinese spying. They point to Chinese laws that allegedly require every domestic company to assist with intelligence gathering if Beijing requests it. Huawei has repeatedly denied that it would engage in any form of espionage or provide data to the Chinese government.

"Huawei's retail partners are rolling out advertisements to link Huawei with being the patriotic choice, to appeal to a growing demographic of Chinese consumers willing to take political factors into account when making a purchase decision," the Canalys report said.

Apple warned over weak demand in China at the start of the year but cited improvements in the market last quarter. Analysts will be closely watching Apple's revenues in China when the iPhone maker reports its fiscal third-quarter earnings after the market close Tuesday.

Here's what investors will be looking for in Apple's earnings report